Mr. GRANETTO. I asked the building manager that, and he told me that after he had left the night before, his office had gotten a call, and he mentioned a name of Mr. Kalure's office. I am not sure who Mr. Kalure is.

The occupants of the building were Agriculture, Defense, Interior. HEW, Treasury, Transportation, Action, Civil Aeronautics Board. FTC, Interstate Commerce Commission, GSA itself, U.S. Information Agency, and U.S. International Trade Commission. I have some documents as to whether that is completely accurate, but that is what GSA's records show.

Senator CHILES. Other than what you saw with the Xerox paper. was there anything really valuable in there, or was it mostly junk? Mr. GRANETTO. There was some stuff that was valuable. Our photographer got quite excited. It seems that we had borrowed him from the General Accounting Office and they were looking for an enlarger, something to blow up pictures, and he found an item there worth $350 that was usable sitting in an open office. I was also told that there was ammunition stored in the building. The building was basically unguarded, broken into.

Senator CHILES. What kind of ammunition?

Mr. GRANETTO. I have no idea. I am under the impression it was .38 caliber ammunition either from Federal Protective Service that had been in there prior, or somebody else, but I do not know.

I firmly believe that the people that put the stuff there just intended for it to disappear, never intended to find it.

Senator CHILES. That building, apparently, used to be a ship-repair or shipbuilding facility. I understand that there are some five floor here and the storage is in two wings. The building has a freight elevator; does it not?

Mr. GRANETTO. Yes, it does, Senator.

Senator CHILES. As you come up to the back door, does anybody say, what are you doing here and what do you want?

Mr. GRANETTO. No, Senator.

Senator CHILES. When I came here the other day, we could have driven a truck in here just as easily; could we not? Use the lift, use the freight elevator, and we could start emptying everything that didn't have a lock on it, and knocked in one of these doors if we wanted to. Mr. GRANETTO. That's exactly the situation.

Senator CHILES. Certain of the agencies have somebody that's assigned on their floor, supposedly during the time?

Mr. GRANETTO. I think up on the floor above us, I am not sure what the agency is, but that gentleman was there four or five times when I was through and we forced our way into areas through holes in the wall and he never came out.

Senator CHILES. Then there were a couple of other agencies that had some kind of an alarm service on the door.

Mr. GRANETTO. Yes, they did.

Senator CHILES. Do you know whether that alarm service also worked on the cardboard walls?

Mr. GRANETTO. I don't know, Senator.

Senator CHILES. It did work on the door.

Before we go to the other locations that you mentioned, let me ask you another question. Specifically on the pictures, I can hear people

say that, you know, this furniture doesn't look so great, but is it usable?

Mr. GRANETTO. It is a viewpoint, Senator. It is usable. As an accountant, you have to look at several aspects of it. It is probably by accounting standards down to zero balance, but let's look at it from the taxpayer's viewpoint. It is usable. It has a value. It has a replacement value. If I have to replace that desk, it is going to cost $400 or $500 and that is going to be out of somebody's pocket. If I take it out and put it in somebody's office, they can use it. It is not going to cost anything other than what it takes to move it out of here. Senator DANFORTH. If it has no value, why store it? There is a cost of storing it; isn't there?

Mr. GRANETTO. There is a cost of storing it.

Senator DANFORTH. What's the comparable cost of storing it in the private sector?

Mr. GRANETTO. I have been told when they rent storage space in the D.C. area, GSA is paying on the average of $3 per square

year.

foot a Senator DANFORTH. So GSA rents space. Is this building owned by the Government?

Mr. GRANETTO. This is owned by the Government. There would be a standard level user charge. I am not sure what it would be for this building.

Senator CHILES. You don't know what the standard level user charge is, what they are supposedly charging the agency?

Mr. GRANETTO. I have a faint recollection of someone saying $5 and something for this building.

Senator CHILES. Per foot?

Mr. GRANETTO. Yes.

Senator PRYOR. If the U.S. Government bought no additional furniture in 1980 and 1981, would we have enough furniture in existing warehouses to supply the Government?

Mr. GRANETTO. In the National Capital region I am quite sure we have enough furniture to.keep the Government going for 10 years. Senator PRYOR. You are saying that we could go for another 10 years without buying any more furniture and have a sufficient amount on hand, and yet we are still buying $200 million worth a year; is that correct?

Mr. GRANETTO. That is correct, Senator.

You have to understand that some Federal employee would not have a new desk, but that desk right there looks perfectly usable to me. Senator CHILES. Tell me about some of the other places that you

visited.

Mr. GRANETTO. I visited the Department of Housing and Urban Development warehouse on the second floor at 10th and P Streets Southeast. I went in with the building manager. The security was pretty good. HUD has about 50,000 square feet. The floor was absolutely loaded with new furniture. I was amazed at the amount of furniture, especially chairs, at the location.

Senator CHILES. How many chairs did they say they had?

Mr. GRANETTO. They said they had 500 new chairs that just arrived and 2,662 new chairs, basically, for HUD. I was able later to determine

Senator CHILES. 2,600 new chairs?

Mr. GRANETTO. Yes, Senator.

Senator CHILES. How many employees does HUD have?
Mr. GRANETTO. In the D.Č. area, 5,000.

Senator CHILES. So it has got a new chair for every two employees. Does every employee of HUD have a chair now?

Mr. GRANETTO. I haven't heard anybody complaining, Senator. I have been in the building and it looks to me like we do, yes.

Senator CHILES. Did they tell you why they have all this new furniture?

Mr. GRANETTO. I wasn't able to determine that. I only talked to the warehouse people.

Senator CHILES. Tell me about the Department of Interior site. Mr. GRANETTO. I went to two of those sites. They have nine locations in the National Capital region. I visited their mechanical floor, which would basically be the sixth floor and attic of the main Interior building, and again I saw what I saw at the Department of Agricul ture prior, an attic cluttered with furniture. Access was limited, control was good. Most of the furniture was dusty and old.

Senator CHILES. Did you ask them them for their inventory? Mr. GRANETTO. Yes, I did. The Inspector General's people told me that there was inadequate or no inventory available at that site at that time. We were able later to obtain an inventory but it was done, I think, on special request.

Senator CHILES. Now, you are a CPA. Isn't the basic accounting tool in any kind of business an inventory?

Mr. GRANETTO. Yes, it is, Senator.

Senator CHILES. Would you ever know what you have if you didn't have an inventory?

Mr. GRANETTO. No, you would not, Senator.

Senator CHILES. Would you ever know if something had been stolen? Mr. GRANETTO. If you don't know how much you have, Senator, I don't know how you can tell what has been stolen or if it has been stolen. If you have 4,000 desks someplace, or 1,000 and someone steals 10, how do you know?

Senator CHILES. Didn't we discuss some apparently abandoned Interior furniture at a location close to the Department of Agriculture at our October hearing?

Mr. GRANETTO. Yes, that was the South Auditor's Building at 14th and Independence, I believe it was.

Senator CHILES. Have they moved that furniture out?

Mr. GRANETTO. Well, I have good and bad news for you, Senator. They did move it out, but they moved it over to temporary buildings, the ones we just had the pictures of, the ones that are almost falling apart. I think they put it there so it would disappear; I don't know. They moved it from one dump to another.

Senator CHILES. Please continue your discussion about the Interior side.

Mr. GRANETTO. That would be a building called the Star Warehouse at 120 Canal Street Southeast, which is just behind me. This is a four- or five-story building behind the Washington Star. Senator CHILES. That's the old White Warehouse?

Mr. GRANETTO. Yes, it is, Senator. Apparently it was storage rea for Star paperstock at one time. A sign on the front says, "Deartment of Labor Warehouse." Interior is on the top floor, and that appens to be how I got in. I was going with the Interior people, out I am told that Interior furniture belongs to the Office of the Secretary. The more important thing about the building is that the ower three or four floors were all loaded with furniture. It all belongs o the Department of Labor. It is new furniture, used, mixed; none of It looks extremely damaged.

Senator CHILES. Most of the rest of your report really sort of went ike this?

Mr. GRANETTO. It did, Senator.

Senator CHILES. I want to thank you very much for your efforts. We are going to try to move along here because we are expecting a vote in a few minutes, so thank you very much for your investigation. Mr. GRANETTO. Thank you.

Senator CHILES. Our next witness will be Mr. Kurt Muellenberg, Inspector General for the General Services Administration. He is accompanied by Mr. Lowell Fox and Mr. Alban Abraham.

[Whereupon, Kurt Muellenberg, Lowell Fox, and Alban Abraham, having been first duly sworn, were called as witnesses herein and were examined and testified as follows:]

TESTIMONY OF KURT MUELLENBERG, INSPECTOR GENERAL, GENERAL SERVICES ADMINISTRATION, ACCOMPANIED BY LOWELL FOX AND ALBAN ABRAHAM

Senator CHILES. I believe you have a statement, Mr. Muellen berg, and we will allow you to proceed. I think you also brought, at our request, a copy of an audit report, entitled, "The Interagency Audit of Property Management: Systems Furniture," dated December 14, 1979; is that correct?

Mr. MUELLENBERG. That is correct, Mr. Chairman, I have a very brief statement.

Senator CHILES. Without objection I want to submit this audit report into the record as part of the record, and your statement in full will be put in the record, and any way you can brief it for us will be appreciated.

[The audit report referred to follows:]

This report presents the preliminary findings of one aspect of our interagency audit of property management. The report is made at this time to inform you of our progress and because it may have an impact on procurement reviews made by other participants in the interagency audit. Because additional information will be forthcoming from the interagency working groups, we are not making recommendations at this time. Recommendations may be made to GSA in an interagency audit report and GSA comments will be solicited and included in that report.

If you wish to comment on this interim report, it would be appreciated.